March 2010

Every winter I help out as a volunteer for the CARIS Islington Cold Weather Shelter in north London near where I live. The NightShelter (as we call it) offers dinner, bed and breakfast for between 15 and I think around 50 homeless people every night for the first three months of every year. If you are wondering why only January to March, it is because the NightShelter was originally designed to pick up from other charities whose activities stop after Christmas.

The NightShelter rotates between seven different churches each of which has a designated night of the week. I volunteer on Fridays when the shelter is at Christchurch in Highbury and the pictures you see below are from there.

I am telling you all this because I have just donated the small amount of advertising money this blog made in the last six months to CARIS, as I also did last winter. TheEquityKicker is only a smallish site (March will be just over 13k uniques) and despite the various experiments I have made with advertising I have never been able to rake much in. For those that are interested, the money I do get comes from a paid link placement you can find low down in the left sidebar.

It isn’t much, but every little helps, particularly at CARIS which is a small charity – and none of this would be possible if it wasn’t for all of you taking the time to read my ramblings and come visit the site, so a big thank you, both from CARIS and from me.

The guests are offered a cup of tea or coffee when they arrive

Then everyone has dinner together, at the head of the table you can see a volunteer in blue talking with a guest in grey

Three of the guests are having a chat before they go to sleep. The beds are in a room which is adjacent to the main church hall, and you can see a church notice board in the corner of the room.

Fred Wilson gave a talk in February at the Future of Web Apps conference in Miami where he listed his ‘ten golden principles of successful web apps’ (video and transcript are here on the Carsonified blog). Maybe surprisingly he put speed at number one – his logic:

First and foremost, we believe that speed is more than a feature. Speed is the most important feature. If your application is slow, people won’t use it. I see this more with mainstream users than I do with power users. I think that power users sometimes have a bit of sympathetic eye to the challenges of building really fast web apps, and maybe they’re willing to live with it, but when I look at my wife and kids, they’re my mainstream view of the world. If something is slow, they’re just gone.

We think that the application has to be fast, and if it’s not, you can see what happens. We have every single one of our portfolio company services on Pingdom, and we take a look at that every week. When we see some of our portfolio company’s applications getting bogged down, we also note that they don’t grow as quickly. There is real empirical evidence that substantiates the fact that speed is more than a feature. It’s a requirement.

I make this ponit because speed is easily forgotten. It is less talked about than other features and, in comparison to adding new and cool stuff, working on it is hard and unrewarding. But the benefits are real – as Fred puts it, speed is a pre-requisite for capturing the mainstream and the faster your site the quicker it will grow.

For interest I pulled the data below from Alexa. I was a little surprised to see how slow some of the top ten sites are, but I think this table in general bears out the thesis that speed is important. Most of the sites that are going places are fast and YouTube apart the slow ones are arguably in decline. Perhaps it is inevitable that a heavy video site like YouTube is slow, and a check against Metacafe (average load time 4.169s) and DailyMotion (average load time 6.75s) shows that when compared with its peers at least YouTube’s speed is pretty good.

Site

Alexa ranking

Average load time (s)

Alexa description of load time

Percentage of sites that are slower

Google.com

1

0.781

Very Fast

88%

Facebook.com

2

0.632

Very Fast

91%

YouTube

3

2.777

Average

41%

Yahoo

4

1.622

Fast

66%

Live.com

5

2.879

Slow

39%

Wikipedia

6

1.734

Fast

63%

Blogger

7

1.718

Average

49%

Baidu

8

0.758

Very Fast

89%

MSN.com

9

3.378

Slow

31%

QQ.com

10

1.259

Fast

76%

A note on the data: as the eagle eyed amongst you might have noticed Alexa has Wikipedia with a slower page load time and describes it as fast, and Blogger with a faster page load time and describes it as average. I don’t know where the error is and simply reproduced the data on the site verbatim.

By way of calibration I compared TheEquityKicker stats on Pingdom and Alexa. They are consistent with a 2.2-2.3s response (49% of sites are faster). A speed-up is in order, and hopefully underway.

Fred’s nine other principles (and he alludes to more in the Q&A) are also worth reading. If you own a site you should read or watch the whole interview.

For most of the ten years I have been a VC device fragmentation has be-deviled innovation in the mobile internet, and the iPhone’s success since 2008 came in large part because for the first time there was enough users on a single mobile device to attract a flock of application developers. However as you can see from the table below, the iPhone is only a small part of the installed smartphone base and if mobile is going to deliver on its promise those iPhone developers will need to be able to get their apps on the devices that the majority of the market will be using.

Note that this market share is based on device sales and is different to the much publicised Admob survey which is based on traffic. The iPhone and Android rate much higher on this measure as the devices get used more. I chose to show the device sales data because that is a better indication of how fragmented the market is today.

I’m writing this post after reading about fragmentation within the Android platform, I had heard some mutterings about different flavours of Android for different operators and the challenges of working with multiple operator controlled app stores. Engadget described the problem like this:

the kind of fragmentation that has already left users running not one, not two, not three, but four distinct versions of the little green guy (1.5, 1.6, 2.0, and 2.1) depending on a seemingly arbitrary formula of hardware, carrier, region, software customization, and manufacturers’ ability to push updates in a timely fashion

Ouch.

There is good news for the Android platform though, and that comes in the way Google are talking about resolving the problem (again from Engadget):

We’ve been given reason to believe that the company will start by decoupling many of Android’s standard applications and components from the platform’s core and making them downloadable and updatable through the Market, much the same as they’ve already done with Maps. In all likelihood, this process will take place over two major Android versions, starting with Froyo and continuing through Gingerbread. Notice that we said apps and components, meaning that some core elements of Android — input methods, for instance — should get this treatment. This way, just because Google rolls out an awesome new browser doesn’t mean you need to wait for HTC, Samsung, or whomever made your phone to roll it into a firmware update, and for your carrier to approve it — almost all of the juicy user-facing stuff will happen through the Market.

I like the way this removes operators and device manufacturers from the upgrade path. I can also see consumers getting prompted to download relevant components when they need to much like a web page asks if you want to download a new plugin if it is required to render the page properly or show a video. This model works extremely well on the PC and could be equally powerful on the mobile, particularly as individual developers could contribute to Android to make their apps work better, should they want to.

I guess I like this story because I’m looking for reasons to believe the device fragmentation problem will go away, both from technology based solutions for developers and from OS/value chain based solutions like the one described here.

Mike’s post is titled Reputation Is Dead, It’s Time To Overlook Our Indiscretions and his point is that as more and more of our personal history gets put online if we are going to continue to function as a society we will need to become more tolerant of past minor indiscretions. I buy into that argument and as a development I think it will bring more honesty into public life. As someone wrote in the comments it is already happening in politics:

great piece! It’s already happening. In the 80s no politician could admit they’d ever smoked pot in school. By the 90’s Clinton managed with “tried it, but didn’t inhale.” Now it’s no big deal. At one point having been divorced (or getting caught having had an affair) would disqualify you for office. Now divorce is basically a non-issue and few pols can even get away with admitting they had affairs (not that it won’t effect them, but it’s possible). This trend pre-dates the web but the Internet is probably accelerating the shift in our culture.

Fred’s post is titled How To Defend Your Reputation and his point is that we should all take the time to defend our reputation online, and not allow trolls to have the last word. Again, an argument I buy into.

The big point for me here though is that these developments increase the importance of integrity by making it much harder for anyone to live a lie, and that these arguments apply equally to the reputation of brands as of people. In his post Fred describes an episode where his integrity was attacked on Hacker News and a reader of Fred’s blog named Mark Essel came to his defence – without knowing the details I am assuming Mark did this because he has been impressed and won over by Fred’s writing, thinking and contributions to the startup scene. In his Hacker News post Mark even makes the point that one of the reasons he trusts Fred is that his thinking has been consistent. Consistency is very hard to maintain without integrity. Kidmercury put it this way in the first comment on Fred’s post (emphasis mine):

the way to win any beef is with the truth. if you want to attack someone’s reputation, find the truth they are afraid of. if you want to be immune to attacks, always tell the truth.

social media is still not evolved enough yet to fully embrace this principle. but it is only a matter of time. on a long enough timeline, the truth always wins. always.

I’m very hopeful that social media will usher in an era of reduced hypocrisy and greater efforts by companies to promote themselves based on the quality of their products and services. The ride to get there might be a little bumpy though.

In a related point I also think that anonymous comments and posts will lose credence, and that value will accrue to identity verified services.

Trustworthiness, Transparency and Openness. We insist on honesty, integrity and openness.

Raise the Bar. It is incumbent upon us to increase our standards of performance and strive for excellence.

Lead by Example. We are stewards of excellence and consistently demonstrate our values.

One Voice. Collective responsibility must be embraced.

Bring Me Solutions. Identifying a problem is important, but finding the solution is far more valuable.

No silos. It’s not “their” problem — it’s “our” problem.

The Obligation to Care. We must truly care about this business and our colleagues.

This is a very 21st Century perspective on leadership, particularly the ‘obligation to care’. When I was a management consultant with Gemini in the 1990s we prided ourselves on being leading edge thinkers with regard to corporate culture and values and we hadn’t cottoned on to the notion of servant leadership which I increasingly think is the way of the future. I posted this neat three part description of servant leadership from Max DuPree on this blog some time ago – 1) set strategy, 2) work like a dog for your people, 3) say thank you.

Reported on the BBC today the Times and Sunday Times will start charging for online access to their content from June. Finally we get to see a paywall experiment from a major newspaper! It will be interesting to see how it goes, to say the least.

The charge will be £1 per day or £2 for a week’s subscription.

Murdoch has of course been saying that he will start charging online for a while and with this move he puts the online future of two of his major UK titles up in the air. The Sun and The News of the World will remain largely free, presumably until he can see whether the move has worked out for the Times and Sunday Times.

Interestingly the Times Online site is not starting from a position of strength. As you can see from the table below it went backwards last year even with a free model. Obviously at this stage nobody knows how many people will choose to pay, but as I wrote last week, my gut is this won’t work out well.

Check out this video from SEOMoz about Linkscape, their link database which helps drive SEO by identifying and ranking the links into a page with the aim of understanding which ones are driving the search ranking. I learnt a lot about how search works from watching this. It is also a) pretty funny, and b) a good example of a product promo video.

If you haven’t seen a demo of Jack Dorsey’s Square yet, take a look at this video. The Square could revolutionise retail point of sale, making it a) radically cheaper to implement systems and b) much easier to introduce new ideas, like voucher redemption.

Serial entrepreneur turned angel investor, chairman and venture partner with DFJ Esprit, William Reeve recently asked me for comments on an article he is writing on “How to pitch for funding” and when I saw the final version I immediately wanted to put it on here. Will has written the piece to go in the British Venture Capital Member Directory 2010, a paper directory which will be out in June and I’m pleased to say that both he and they were happy that I post his article today (you will be able to get a copy of the directory from the BVCA , Tommy Nguyen, +44 (0)20 7420 1852 or e-mail [email protected]).

BVCA Directory : How to pitch for VC funding : An entrepreneur’s perspective

By William Reeve, co-founder and formerly President & COO of the leading international online film rental firm – LOVEFiLM.com

My introduction to venture capital was in 2003 when I co-founded the DVD rental business known as LOVEFiLM.com, which now has four leading European VCs as investors: Arts Alliance Media, Balderton, DFJ Esprit and Index. The business has grown strongly to around £100m revenue, with decent profits, and is building a unique position in the digital entertainment space. This experience has proved invaluable subsequently as I have helped various firms, including Graze.com, True Knowledge and Zoopla.co.uk, form and grow with VC funding. What advice can I offer entrepreneurs considering VC funding?

· VC funding isn’t right for most businesses… Most successful businesses never need VC funding. If the only reason you need funding is because you can’t figure out how to make money, then VC isn’t your solution. And if you can’t raise money from friends/family, you’ll probably struggle with VC too. But if you have a nice little fire burning, and want to pour fuel on the flames, then VC is a fantastic way to do it – but you’ll get a partner who expects you to create an inferno.

· …but if you fancy it, build a relationship as you would court a future spouse. Nobody decides to get married on the first date. And likewise, VCs do not decide whether to invest at the first meeting. Successful entrepreneurs cultivate a relationship – with the right initial introduction, then a mixture of formal and informal meetings, occasional update emails and even the occasional playing-hard-to-get huff. Once the relationship is stronger the formal pitch becomes the way to pop the question, but a lot of ground needs to be covered first.

· Then brace yourself: you’ll give up 30% each funding round. This is bizarre; surely how much you dilute is based on what you’re worth and what you need, and not much else? Not in the real world. In practice most VCs want a large minority stake, and good entrepreneurs want to dilute as little as possible. When conducted between consenting adults, the mating ritual invariably leads to the same outcome – somewhere between 25 and 40% equity dilution. So make sure the amount you need and the valuation of the business you expect support this sort of maths, or else you’ll likely end up finding the only partners who’ll have you are those who have little experience in the ways of the world.

· And make sure you’ve got the right help. VC funding has its own special set of traditions and jargon. Read up on it – there are several good objective blogs which cover the basics well. If you haven’t worked with VCs yourself, consider using an adviser, or getting a Non-Exec Director or seed investors with the right connections. That’ll help you learn the pitfalls of ‘3x participating preference’, ‘reverse vesting provisions’ and ‘weighted-average anti-dilution protection’.

Finally, remember to be positive and passionate no matter how badly the meeting is going, and get used to the fact that unless you hear ‘yes’, you’ve heard ‘no.’

As I mentioned back in January and as you can see from the picture above the UK and Ireland Tech Tour is coming up next month. I’ve been on two Tech Tours before and they work well. I will be attending this one. For those that aren’t familiar with the format, the Tech Tours rotate around different countries in Europe and each time around 30 of the best local companies get the chance to present to an audience of around 60 investors. In the last couple of years they have added sector based Tech Tours where the choice of companies is the best in the vertical rather than the best in the geography.

For the companies who present the Tech Tour will be a good opportunity to get exposure to investors, including US investors.

For the attendees it will be a quick way to meet some of the best companies in the UK and Ireland and to hang out with some of their peers in the investment community. It will also be fun – the Tech Tours always combine the serious business of meeting new companies with visits to some stunning locations and some intense late night networking.

There are still spaces for delegates to attend, but registrations are now closed for presenting companies.